GBP/USD extended its post-NFP rebound from multi-week lows from the previous session.
The dollar faced a headwind as the chances of an earlier Fed rate hike dwindled.
The increase was fueled by excitement over the UK’s relaxing of COVID-19 limitations.
During the early European session, the GBP/USD pair rose to three-day highs, moving closer to the mid-1.3800s in the previous hour.
On Monday, the pair gained positive traction for the second session in a row, and is now attempting to build on the previous session’s post-NFP rally from its lowest level since April 15. The increase was fueled by a variety of factors, including a weaker US currency and confidence about the UK government’s promise to ease COVID-19 limitations in the final step.
The latest US monthly jobs report shows that the unemployment rate unexpectedly rose to 5.9% in June, essentially negating the headline figure of 850K new jobs. This helped calm market concerns about the Fed raising interest rates sooner than expected, and kept USD bulls on the defensive for the first part of the trading session.
The British pound, on the other hand, was bolstered by hopes that UK Prime Minister Boris Johnson would eliminate most restrictions in England on July 19. Johnson will describe the path out of lockdown later this Monday, according to the UK government. Another factor that prompted investors to reduce their negative wagers on the GBP/USD pair was this.
It remains to be seen whether the GBP/USD pair can profit from the advance or if new supply emerges at higher levels in the absence of market-moving economic data. Furthermore, tight liquidity circumstances on the heels of a US vacation may discourage traders from putting aggressive wagers, so bullish traders should exercise care./n
